I’ve Paid For This Twice Already…

Archive for the ‘numbers’ Category

This past week, all I did directly towards reducing our debt was made my monthly car payment.  That dropped our debt total about $200, and the numbers in summary stand as such:

• Debt at start of blog (6/19/07) : $36,451.71
• Current total as of 09/23/08: $15,037.21
• Principal paid to date $21,414.50
• Broken down into:
  • Credit Card: PAID OFF 2/7/08
  • Student loan (at 7%): $11,084.68
  • Spouse student loan(at 9%): $2579.15
  • Car loan (at 4%): $1373.38 (made $228.32 minimum payment this week)
• NCN Network Chart % debt paid off:  58.75%

So things are slowly progressing.  As far as money saved in my snowflake account to be applied to my spouse’s student loan next month, I currently only have $62, mostly from survey-taking payouts.  This is because all of my taekwondo income this month is being diverted to pay for an instructor seminar I am attending at the end of October.  I had started saving for this, but I was planning on attending next October instead of this one.  But my spouse thinks he’ll manage with the kids for 3 days on his own, and it would be better for me to attend this year because not having this particular certification is holding my earning potential back.   It will affect the debt reduction in the short term next month but next month is also my spouse’s 3 paycheck month so it should all even out.  I will have tutoring income and blog income to add to my snowflake fund before I make our next student loan payment in October.

A question has come up in comments about our future debt elimination strategy and I wanted to address it.    Once my spouse’s student loan is paid off (which I am hoping happens in November), there is a big divide between the balance of the car loan and the balance of my student loan, so will we go interest order or balance order for the remainder?  In December, most likely just applying the $437.59 we have budgeted in our debt snowball every month for my spouse’s student loan to the car loan might completely knock it out.  But I am going to do my best to resist that urge and apply it to my own student loan.  Why?  Because the 4% interest we pay on the car loan is much less than the 7% we pay on my student loan.

My spouse wants to quick one-two punch of eliminating two debts before 2009.  Of course, he’s also less emotionally bothered by my student loan.  So, I may lose this fight.  We’ll see.  Either way, good things will happen, and the car loan is scheduled to be completed in March anyhow.  And I would love to knock my student loan balance down to four figures by 2009.

So on to next week, at which I will not have made any more debt payments but hopefully I will have collected a few more snowflakes.  And since it will be the last day of the month, I should have an idea if I have any budget snowflakes to add to my debt-destroying snowball.

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I will be the first to admit that I don’t know a lot about investing.  When I sat down and decided to take control of my financial future, I focused on the pressing needs of getting out of debt and fixing the course we were on right now, and other than upping our 401K contributions and moving my IRA to a company I was happier with, I didn’t do a whole lot regarding investing.  But I’ve been slowly preparing for taking another step in the investing arena - moving my kids’ college savings accounts into 529 accounts. My goal is to do so by the end of the year so that I can collect the tax advantage of doing so (my state offers a tax incentive for investing with their plan).

And after yesterday’s miserable stock market performance, I’m starting to get cold feet about doing so.  The college savings accounts currently sit in ING Direct accounts.  No, they do not earn amazing amounts of interest - but they do earn interest.  On a misguided whim this morning I looked at my IRA, and from taking the value a year ago and today, found it has lost 16% of its value in the past 12 months (I haven’t made any contributions to it in the past year).  It is hopefully a very long time until I retire, but I can’t help to feel a little depressed about it anyway.

So, I stay the course, keep on keeping on, and hope for the best.  And onward I go with the researching of the 529 accounts.  Stocks are on sale, right?  I don’t want to let fear rule my actions but I also don’t want to be the lemming to follow everyone else off the cliff.  So I sit, and think, and I have a few months left before the end of the year, anyway.

On to current money.  I haven’t paid anything new to debt this week, because I paid the two student loans last week, and will be dropping off my car payment on the way to work Friday.  So the debt numbers, for this week, haven’t changed.  I did get paid from one of my two taekwondo teaching gigs this week, but that money this month isn’t going towards debt.  I have an instructor seminar I have to attend for a certification at the end of October, and I had already designated my taekwondo income from September as well as money I had previously saved for this seminar to go towards paying for that.  It will slow down the debt elimination for next month a bit, but it is something I need to do to keep advancing my taekwondo teaching opportunities and ultimately increase my income from those endeavors.  So I planned a bit for it and I am happy to be able to fit it into our budget.  I did have $40 come in the week from taking surveys, which has been put into the debt snowflake fund, as well as my tutoring income from August (which was pretty low since summer is not a busy tutoring time).  I won’t be making another snowflake payment until next month when I pay down more of my spouse’s student loan, so I have more time to accrue something there.

I also have some teeth-related issues to attend to - I have good teeth but not so great gums.  I hardly ever have cavities, but my gums are receding, and I am going to have some aggressive treatment done to try and reverse that trend before it gets any worse.  That takes place over the course of the next two months, and will be anywhere from $300-$600 after insurance depending on how much treatment I end up having to have done.  It involves lasers, and really does not sound all that fun.  These things together mean that I probably won’t be able to kill off the student loan debt in October like I was hoping, but I am still on track to eliminate that debt by the end of 2008.

Not a lot of progress to report but we’re adapting and moving forward, albeit sometimes slowly.  As for my computer monitor, thank you to everyone who offered suggestions or monitors they aren’t using!  We are still discussing what we are going to do, but if we decide to go with a quick fix CRT replacement, we found some on Craigslist practically free.   We may upgrade to an LCD one because my spouse’s monitor is an old CRT, and even though I plan on getting a laptop in the future, my spouse could use the LCD one once I don’t need it any longer.   I’m not sure what we’re going to do yet, but we’re exploring options and figuring things out.    I’m grateful that I no longer have the contract position where I was required to have a 19″ or larger monitor, because we’d had to have bought a new one already (my spouse’s is a 17″).  We’ll see.  I’ve been harassing Dell but they aren’t looking too promising as far as replacing their defective product.  Yet, at least.

On to another productive week!

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Even though our situation has changed greatly since June of 2007 when I started this blog, we have purposely kept many parameters the same in how we deal with our money.  For example, we owe less debt because we’ve paid off the credit card.  However, we’ve kept the debt minimum payment the same amount in our budget each month that it was before the credit card was paid off, and applied that extra $200 that was going to the credit card each month to my spouse’s student loan.    I now consistently earn more money per month than I did in June 2007, but we’ve kept my monthly contribution to the general budget the same as it was in June 2007, and all money above and beyond that goes directly to our snowflake fund to pay off my spouse’s student loan.

We do all this because it is the essence of successfully using the debt snowball and snowflaking together for maximum impact.  The snowball picks up speed (and it has!) as other debts are paid off and those minimum payments rolled into a new debt target.  Snowflaking works when you consistently collect those snowflakes you earn and apply them to your goal (be it debt, savings, investing, or something else) instead of just letting them melt into the general budget.  If you start spending that money in your budget, then you become dependent on it to make your budget.

So, I am trying as hard as I can, and tweaking as much as I can, to keep both these things happening.  We base our budget on the original amount we were earning in June 2007, and we keep all extra earnings above that flowing into our snowflaking fund.  But, I must admit, it is getting harder to do so.  In June, I said one of my reasons for wanting to get out of debt was how tight our budget was and how close our spending vs earning numbers were.  We needed breathing room.  And although I have, in fact, created that breathing room, I’m not allowing us to use it yet so that we can keep making significant progress.  And the reality is, prices on gasoline and food as well as many other things have gone up, and our budget is squealing for mercy.  I sat down today to pay bills and balance everything, and after everything is said and done for the beginning of September, we have about a $59 cushion (above minimum projected gas and food expenses) to last until our next paychecks.  It should be okay, but it makes me nervous.  I went ahead and paid all the snowflakes to the student loan however, because that money becoming part of our budget is a last resort for me.  I’m going to have to reevaluate how much money I contribute to our budget by next year though, and we’ll see.  I might also have to stop snowflaking my spouse’s last raise.

Here are our current numbers as of today, after paying my minimum student loan payment and applying the minimum plus snowflakes to my spouse’s student loan:

• Debt at start of blog (6/19/07) : $36,451.71
• Current total as of 09/09/08: $15,260.46
• Principal paid to date: $21,191.25
• Broken down into:
  • Credit Card: PAID OFF 2/7/08
  • Student loan (at 7%): $11,084.68 (paid $144.50 today)
  • Spouse student loan (at 9%): $2579.15  (paid $1131.41 today)
  • Car loan (at 4%): $1596.63
• NCN Network Chart percentage of debt paid:  58.14%

The spouse student loan payment was $437.59 budgeted minimum plus $693.82 snowflake amount that included all my earnings from the end of last month and the beginning of this one, minus the $500 I contribute to the budget every month.  I earned less from tutoring because it was summer, so hopefully I can bump that number up a little this month.  We have past the $20,000 mark of debt paid off!  I do not think that we will be able to pay off the student loan by October like I was originally hoping, but we are on track to definitely have it paid off by the end of the year.

On to next week - I’ll pay the car payment and knock the debt down a little bit more.  Is your budget squealing?  Good luck with handling the pinch!

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I can’t believe it is September already!  I guess that old saying about how time flies when you are having fun is true after all.  We’re now settling into our fall routine, with my son back in school and my afternoons home with my daughter alone.

This is the interesting budgeting in-between time.  Since we are still living paycheck to paycheck (although we do now have some back-up funds in case of an emergency) when I pay things is mostly dependent on when my spouse gets paid.   On top of that, the debt target right now (my spouse’s student loan) has a lot more conditions and regulations about how to pay extra money towards it.  With our credit card, I just threw an extra payment onto it whenever I earned some extra money.  So there is this in-between time, in-between paychecks and in-between payments when things are somewhat on hold as far as progress goes.  I still earn extra money (about $300 right now waiting to be put towards the student loan) but it sits in our savings account designated for this purpose and waits for the next time I make a student loan payment.  Which won’t be until next week.  So the overall debt payment numbers are the same as the last time I reported them two weeks ago.  Since my spouse (and I) get paid this Friday, that will change this weekend, but not before.

A number of people have asked about the idea of moving the student loan to a credit card with a 0% transfer offer and then pay it off there.  It would make things simpler as far as making extra payments, and it would cut the interest considerably.  However, I haven’t seen a 0% balance transfer offer recently that didn’t have a 3% fee attached for the privilege of transferring the money.  And, we do get a tax break for the interest paid to our student loan, which gives us a little bit back.  Since I am hoping to have the student loan paid off in October (my spouse gets an extra paycheck then and I hoping it will put us over the edge) I am content to leave the loan at Sallie Mae I think.  I have pondered the idea with my own student loan, which is at 7% interest.  To transfer it all would have about $330 in fees (3% of $11,000) but it would probably be worth it as far as interest saved, as long as I can find the right offer.  There are pros and cons, most of them psychological, that I have to consider, but it is an idea that has more than crossed my mind.  The little things do add up, and for example, our overall paid off total has sat at JUST under $20,000 for two weeks now.  If I could pay more easily, I would have paid the extra $8 by now and boosted my morale a little bit.  And that $8 would not be earing interest right now.  There is something to be said for ease of payment.

As far as August as a whole, that went okay.  We overspent on our grocery budget by about $100 this month, and I am pretty sure that this is an increase that is here to stay.  After so much time studying our grocery spending (which I include toiletries, cleaning supplies, over the counter medicines, and other miscellaneous stuff like that) I think that I am going to have to admit some sort of defeat and raise the budget yet again from $80 to something closer to $100 per week.  Silly children who eat and prices that go up every single month.  Otherwise, however, we did stay in our budget by and large, and after carrying forward the money for irregular expenses I save each month, we ended up spending about $200 less than we earned.  So we’re still on target as far as the overall budget goes, and that $200 will be moved to our student loan payoff savings account and added to the payment I make next week.

On to September!  This month:  spouse student loan under $2000.  It shall happen.  And I shall rejoice. 

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For those new to my blog, every Tuesday I write a feature called “Tell All Tuesday”, where I go through the progress we’ve made that week on reducing and eventually eliminating our debt.  I talk about the different payments we’ve made, and some of the different savings and alternative income I’ve come up with to generate those payments.  With being sick last week, and then my kids being sick this weekend (I like to share, what can I say) I haven’t had a lot of time to sit down and look at the budget and our debt payments.  This weekend, I managed to do all the number crunching so that I knew how much I could send to debt this month, but I didn’t get a chance to sit down and write it all down until now.  So welcome to Tell All Tuesday… on Thursday.  At least it is still alliterative. 

This past month, we got an expected windfall of sorts, the rebate for our new furnace came from our utility company.  I knew we were getting a $270 rebate for installing an energy-efficient furnace, but I didn’t know how long it would take.   It came at the end of July, so that got to boost our debt payments up a bit more for August.  I had planned all along to apply the rebate to my spouse’s student loan debt, and so I did.  The state of our debt this week looks like:

Debt at start of blog (6/19/07) : $36,451.71

Current total as of 08/20/08: $16,458.76

Principal paid to date $19,992.95

Broken down into:

• Credit Card: PAID OFF 2/7/08

• Student loan (at 7%): $11,175.54 (paid $144.50 minimum)

• Spouse student loan (at 9%): $3686.59 (paid $1288.47)

• Car loan (at 4%): $1596.63 (paid $228.32 minimum)

NCN Network Chart:  54.85% of total debt paid off since start of blog.

That principal paid is ever so close to $20,000!!  That is simply astounding to me.  Twenty thousand dollars.  That would be a pretty nice new-to-me car.  Yikes.  My spouse’s student loan has the highest interest, so our snowflakes all go there right now.  Besides the budgeted minim of $437.59, I paid our furnace rebate to that debt, as well as money from taking surveys, money this blog earned through advertising, money I made tutoring, and some of my taekwondo income.  Overall, we have been able to consistently pay between $1000 and $1500 total every month to that debt, and I am hopeful that if we can continue that for 4 more months, we will have that debt completely paid off before the end of the year.

The debate here right now is funding Christmas.  My spouse is paid bi-weekly, so there are 2 months a year he gets 3 paychecks instead of two.  In the past, we have used the one that comes near the end of the year to pay for all things Christmas.  This year, however, we’d like to try and pay the majority of that paycheck towards debt (his 3 paycheck month is October).  But then we’d have to use my alternative income in November to pay for Christmas, because we haven’t saved money for Christmas gifts.  So it kind of amounts to the same thing.  But if the October paycheck could push us over the edge to having the student loan paid off in October… well, that would be tempting.  So, we’ll see.  the “better” plan would have been to save up for Christmas gifts but - we chose not to do that because we knew we’d have some options.  We’d rather have reduced our debt load now and deal with Christmas later.  Scrooge, I am. 

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